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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: New here! Have questions!||Date: 5/6/2013 6:34 PM|
|Author: aj485||Number: 306975 of 311074|
I'm looking at properties that are between 10k and 30k. Small single family homes in a neighboring town, or in my town. They need work, I'm handy, my husband's handy and he has lots of time during the week to work on it. So, I'd be looking at 6k down, max. I know I can save that in a year.
Okay, I'm trying to square this with some of your previous statements, and something isn't adding up.....
To save $6,000 for the investment property down payment (which would be a 30% down payment on a $20k property - as previously mentioned, investment properties generally require a 25% - 30% downpayment, not 20%), that's $500/month for 12 months. In savings, untouched. And if it's a $30k property, you would probably need closer to $9k. And that's not even counting closing costs.
Add to that an emergency fund of (minimum) 6 months of both your current expenses and the new expenses for the investment property, so, what, another $9000? ($1500/month expenses; 6 month timeframe). So that's another $750/month for 12 months that you need to put away in savings, untouched.
Add in another $3k in materials for you and your handy husband to fix up the small single family home that needs work, and that's another $250/month for 12 months, that you need to put away in savings, untouched.
So, all in, in order to save enough money to have the down payment, emergency funds (assuming you need $9k for this) and $3k in materials to fix up the property, within the next year, you would have to save $1500/month for a year, in savings, untouched, to save what has been suggested to you.
Yet, right now, you said that it was going to take you the next 2 months to zero out less than $700 in credit card debt. And you are working to get your savings up to 3 months in emergency funds. So are you really going to be able to come up with another $1500/month to put into savings, untouched, in order to buy an investment property in a year? If so, is there a reason you haven't been able to do that since, say, the beginning of the year? If you had been doing this since the beginning of the year, even if you started at $0, you would now have $6000 in your savings account - which, at $1500/month expenses, is 4 months of expenses, not the 3 you were originally trying to get to.
I think you really need to sit down and figure out what your available cash flow is, and how much of that you can realistically put into savings without touching it, to see if it's really reasonable to think that you could buy investment property in a year. My opinion is that you are getting way ahead of yourself.
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